Scottish Court of Session Decisions

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On 24th January 1877 missives of feu were entered into between William Watson, proprietor of the lands of Overlee, near Glasgow, and Messrs Whyte & Binnie, Glasgow, by which the former offered these lands in feu to the latter in two different lots, the first being a piece of ground extending to 3 acres 2 roods and 20 poles, as delineated on the feuing-plan of the lands, at the annual feu-duty of £16 per acre. In reference to this feu of 3 acres Watson came under the following obligation, which he subsequently duly implemented—“I bind myself to make the roads free of charge to you, except the sewers, drains, curbstones, and gutters, which you shall pay me for. I bind myself to make the roads firmly bottomed, and well set and covered with ashes.” The second and remaining lot was similarly offered by Watson, at a feu-duty of £20 per acre. It extended to 14 acres 1 rood and 30 poles. In reference to this lot the following was the stipulation—“You” (that is, Whyte & Binnie) “shall be bound to put in roads at your own expense, of the same description as I bind myself to do to you as above mentioned.” This offer was duly accepted on the same date by Whyte & Binnie. A feu-contract was thereafter entered into between Watson, on the one part, and Whyte & Binnie and two other persons of the name of William Neilson and Hugh Livingstone on the other, both of whom were taken into the feuing speculation by Whyte & Binnie. The feucontract, which was dated 3d December 1879 and 5th and 7th January 1880, conveyed over to those four persons (1) the 3 acres 2 roods and 28 poles, which were said to be “delineated and tinged red on a plan thereof, endorsed hereon, and subscribed as relative hereto;” (2) the remainder of Overlee, containing 14 acres 1 rood and 30 5–10th poles, which was described as “delineated and tinged blue on the foresaid plan, endorsed hereon, and subscribed as relative hereto.” In regard to the formation of roads the feu-contract contained a special stipulation as follows—”Declaring that the first party (Watson) shall, in so far as not already done, form the roads (including the laying of the sewer-pipes, drain-pipes, cesspools, gutters, kerbstones, but which pipes, gutters, and kerbstones are to be furnished by the second parties) intersecting the pieces of ground above disponed, in so far as delineated and tinged brown on said plan.”

Before the date of the missive-offer a plan had been prepared by a Mr Kirkwood. It showed only the roads on the first or 3-acre feu which Watson was to make. It showed no roads on the other or 14-acre feu. The plan which was appended to the feu-contract was intended to be a copy of this plan. But the plan really appended to the feu-contract showed roads through the 14-acre lot also, and thus while under the missive Watson was bound to make roads through the 3-acre lot alone, he was bound according to the plan on the feu-contract to make them through the whole 17 acres.

The mode in which this error occurred was thus explained by the Lord Ordinary—“Whyte & Binnie, and their two associates Neilson and Livingstone, had entered into the feuing speculation in the year 1877, when there was a good deal of building speculation going on in Glasgow, and the first thing of course that they set about doing was to obtain a feuing plan exhibiting the laying out of the ground for feuing. This was prepared for them by Messrs Kyle, Dennison, & Frew, surveyors, Glasgow. These gentlemen were not the persons who made the survey on behalf of Watson, but their services were taken by Watson in regard to the description of the subjects to be inserted in the feu-contract, and in regard to making a copy of the plan to be appended to that deed. Messrs J. & J. Boyd, the agents for Watson, wrote to these surveyors on 22d October 1877—‘We send the draft feu-contract herewith, and will thank you to check the descriptions and contents of ground. We shall afterwards instruct you to endorse the plan on the extended deed. Of course you will charge our client with such a proportion of the expense of the survey as you think fair.’ It appears from the diaries kept by Kyle, Dennison, & Frew that they had got verbal instructions—and, as explained by Mr Dennison, these instructions came from Mr Boyd—to endorse the plan upon the feu-contract. On the 17th October 1879 there was an entry to the effect—‘Endorse plan on feu-contract between Wm. Watson and David Whyte and others, J. & J. Boyd. See former plan and lithograph plan left, also letter by Mr Watson, 26th September 1879, describing line bounding the ground for small houses.’ On November 19th there is another entry in these terms—' Delineate on reduced plan, endorsed on deed, all the roads as shown on lithograph plan of Overlee, for J. & J. Boyd.’ This lithographed plan shows the whole roads intended to be made by the feuars through the whole 17 acres, and on the same 19th of November Kyle, Dennison, & Frew's time-books had an entry to this effect—‘Delineating and colouring on plan, which was endorsed on deed on 20th October last, all the proposed roads shown upon the feuing-plan of Overlee ground.’ The surveyors knew nothing of the terms of the missives which had been entered into between Watson and Whyte & Binnie, which limited the former's obligation to make the roads to the 3-acre lot, and having got instructions to delineate and colour all the roads and ground they, or their clerks who did the manual work, naturally conceived that it was their duty to colour the whole road contemplated to be made by Whyte and his associates. The feu-contract and the plan appended were signed on the 15th and 17th of November 1879, but in consequence of an agreement come to among themselves by the feuars it was necessary to re-write the last two pages so as to give effect to the agreement, which had reference to the excluding any person from becoming assignee to the share of any one of the speculators without the consent of the others. A new stamped sheet was accordingly got, the two last pages were re-written, and the contract as ultimately executed and delivered was dated 31st December 1879 and 5th and 7th January 1880. None of the persons who were present at the execution of the feu-contract took the trouble of looking at the plan when they ultimately signed the deed. It was at the end of the deed, but between it and the two pages which were signed there was inventory of writs, and so the error which had been committed in tingeing brown the whole roads upon the property was not then discovered.”

The feu-contract was recorded on 31st January 1880.

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In March 1880 Whyte and the other feuars, Binnie, Neilson, and Livingstone, entered into a contract with the Glasgow Feuing and Building Company, which company had been registered in December 1879, by which the company agreed to purchase the lands in the feu-contract. By disposition following on the agreement, which was not executed till 24th November and 2d December 1880, Whyte and others conveyed to the company the two lots of ground, “with our whole right, title, and interest, present and future, therein, and with the whole pertinents thereof, but always with the liberties and privileges, and under the real liens, burdens, conditions, restrictions, limitations, provisions, obligations, and others specified or referred to in the said feu-contract.” The consideration for this disposition was the payment of the sum of £2378, 6s., and there was excepted from the conveyance such parts of the lands as had been sold to other persons by contracts of ground-annual before the purchase made by the Feuing Company.

In March 1883 Mr Crawford, agent for the Glasgow Feuing and Building Company, discovered the error above explained as to the plan. He was instructed, having laid the matter before the directors, to call upon Watson to make the roads through the whole 17 acres. He did so by letter of 8th March 1883. Watson made the roads through the 3 acres, but refused to do so through the 14 acres.

Watson died on 18th June 1884.

The Feuing Company having gone on with their feuing operations, roads had been made from to time on the 14 acres, and in February 1885 they raised a petitory action against Watson's trustees for £334, as having been expended by them on roads in consequence of Watson's failure to fulfil his obligations.

Watson's trustees defended the action, founding, inter alia, on the error as to the plan, which they maintained to be an essential error under which the contract was signed, and they raised an action of reduction of the feu-contract” in so far as the same declares that the said William Watson shall form, or imports an obligation on him or his heirs or successors to form, any roads (including the laying of the pipes, sewer-pipes, drain-pipes, cesspools, gutters, and kerbstones) on the said portion of ground containing 14 acres 1 rood 30 poles and 5–10th parts of a pole or thereby imperial measure, disponed in the second place of the said feu-contract” There was a further conclusion for declarator that no such obligation was incumbent upon Watson or his representatives.

The actions were conjoined.

In the action of reduction the pursuers, Watson's trustees, averred—“(Cond. 8) The mistake which had been made as aforesaid in endorsing the wrong plan upon the engrossed feu-contract was not discovered prior to the execution and delivery of the said deed. It was the understanding and intention of both parties to the contract, at and prior to the execution of the deed, that Mr Watson should only be bound to form the roads within the dotted lines on the said plan prepared by Mr Kirkwood, and in particular that he should not be bound to form any roads, &c., on the said piece of ground containing 14 acres 1 rood and 30 poles, and 5–10th parts of a pole, and that no roads on the said piece of ground should be delineated and tinged brown on the plan. The said feu-contract and plan endorsed thereon were signed by Mr Watson and the other parties thereto under essential error as to their import and effect in relation to the roads, &c., which the superior was bound to form. Both of the parties to the contract believed that the only roads delineated and tinged brown on the said plan were the roads marked on Mr Kirkwood's plan, and situated upon the said piece of ground containing 3 acres 2 roods and 28 poles or thereby, and that no roads upon the said piece of ground containing 14 acres 1 rood and 30 poles and 5–10th parts of a pole were delineated and tinged brown on the said plan, while in fact all the roads on the said plan over the whole ground feued were delineated and tinged brown. Mr Watson being by the terms of the said feu-contract taken bound to form, in so far as not already done, the roads, &c., intersecting the pieces of ground disponed, in so far as delineated and tinged brown on the plan endorsed, it was thus made to appear, erroneously and contrary to the understanding and intention of both parties to the contract, that Mr Watson was bound to form all the roads on the whole ground feued. Mr Watson would not have signed the feu-contract and plan if he had known their true import and effect in reference to the roads, &c., to be formed by him. It was not the intention of either of the parties to the contract that Mr Watson should be bound to form any roads, &c., on the said 14 acres 1 rood and 30 and 5–10th poles.”

In Cond. 11 they further averred—“The said Feuing Company at and before the date of their acquiring the said ground from Mr Whyte and his co-feuars had been informed by Mr Whyte and his co-feuars and others, and well knew, that Mr Watson was not bound to form any greater extent of roads than were delineated on Mr Kirkwood's plan, and in particular that he was under no obligation to form roads on any part of the ground feued other than the 3 acres 2 roods and 28 poles or thereby first disponed in the feu-contract, and they acquired the said subjects on that footing, and not in reliance on the existence of any pretended obligation on Mr Watson to form roads on the said piece of ground containing 14 acres 1 rood and 30 and 5–10th poles. It was known to the said company at and before the date of their acquiring the ground that the roads delineated on the plan endorsed on the said feu-contract had, so far as situated on the 14 acres 1 rood and 30 and 5–10th poles, been tinged brown in error, contrary to the intention of both parties to the contract.”

The pursuers pleaded—“(1) The feu-contract, including the plan endorsed thereon, having been signed by the parties thereto under essential error as to its import and effect in so far as it purported to impose on the superior an obligation to form roads, &c., on the piece of ground containing 14 acres 1 rood and 30 and 5–10th poles, it was null and void quoad such pretended obligation. (2) The feu-contract having been entered into under the common essential error specified, it ought to be reduced or declared null to the effect concluded for. (3) The defenders respectively having acquired their subjects in the knowledge of the essential error referred to, they are not entitled to enforce or to maintain the validity of

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the pretended obligation in question. (4) Decree ought to be granted as concluded for, in respect that it would be a fraud on the part of the defenders to enforce the said pretended obligation according to its terms.”

The defenders pleaded—“(2) The pursuers' averments are not relevant or sufficient to support the conclusions of the action. (3) The pursuer's averments so far as material being unfounded in fact, the defenders are entitled to absolvitor. (4) The rights granted to the creditors and feuars are not in any view liable to be set aside, and therefore the action ought to be dismissed. (5) The action, so far as it concludes for partial reduction, being incompetent, the defenders ought to be assoilzied.”

The Lord Ordinary ( Fraser), after a proof, 1st, in the action of reduction, assoilzied the defenders from the conclusions of the summons, and 2d, in the petitory action, appointed the case to be put to the roll for further procedure.

On 7th July 1886 the Lord Ordinary found that the whole sum expended by the Glasgow Feuing and Building Company in making roads was £112, 19s.; decerned against Watson's trustees therefor; and reserved to the Glasgow Feuing and Building Company all claim for any further advances which they might make or be called upon to make in the formation of roads.

“ Note.—[ After narrating the facts to the effect above stated]—… The question now comes to be, whether redress can be obtained by Watson's representatives against the consequences of the error into which parties fell? The property is now in the hands of an onerous third party, and whatever might have been the pursuer's remedy had the question been raised as between them and Whyte & Binnie, it is contended that the Feuing Company were entitled to rely upon the records as indicating the extent of the property they were buying, and the obligations which the superior undertook. It was averred by the pursuers that the directors of the Feuing Company were aware of the error that had been committed before they made their purchase, and if this had been the case, then, according to several decisions, they could not be allowed to retain the property under such circumstances ( Lang v. Dixon, 29th June 1813, F.C.; Marshall v. Hynd, 18th January 1828, 6 S. 384; Magistrates of Airdrie v. Smith, &c., 13th July 1850, 12 D. 1222; Morrison v. Sommerville and Others, 21st December 1860, 23 D. 232; Petrie v. Forsyth, 16th December 1874, 2 R. 214; Stodart v. Dalzell, 16th December 1876, 4 R. 236). Amongst other matters a proof was allowed of these averments, with the result that the averments were completely disproved. The persons who were said to have had this knowledge were examined as witnesses, and denied it, with the exception of Whyte, who had become a partner of, and had been a director up to 1882 of the Feuing Company. Whyte further states that Gibson, the secretary of the Feuing Company, and the agent of the company, were aware of the error. Now, Gibson was examined and flatly denied this. Mr Crawford, the present agent of the Feuing Company, also deponed that he had no knowledge of the fact till March 1883; and the Lord Ordinary is constrained to believe these two witnesses rather than Whyte upon this point. The whole correspondence and actings of the parties show that it was a new discovery in March 1883.

“There thus being no knowledge on the part of, the Feuing Company, they are entitled to maintain the position that as onerous third parties they had a right to rely upon everything which the records disclosed. If there was an error, they are not to be made the sufferers. The consequences of that error must fall upon the person who committed it ( Mansfield (Stuart's Trs.) v. Walker's Trustees, 28th June 1833, 11 S. 813— affd. 10th April 1835, 1 S. & M'L. 203). It is said, however, that the Feuing Company in point of fact knew nothing about the obligation as to roads contained in the feu-contract before they made their purchase, seeing that neither the directors nor their agent saw the feu-contract until after the minute of agreement between Whyte & Binnie, Nelson & Livingstone, and the Feuing Company, had been entered into, and the Lord Ordinary holds this to be proved in point of fact. But he is constrained also to hold it to be irrelevant. It is no answer to an onerous third party buying heritable property, to say that he had not gone to the records, and there read the title of the intending seller to him. If he makes a purchase, the law says that he shall obtain right to all that the record discloses, if conveyed over to him. The case of Steuart's Trustees v. Hart (2nd December 1875, 3 R. 192) shows how this case would have been dealt with by the Court if the question had arisen between the original contracting parties. When an onerous third party, however, appears upon the scene, different principles must be applied, and a different conclusion arrived at.

“The Lord Ordinary has dealt simply with the action of reduction. In the petitory action he has not pronounced any judgment, because he cannot find in the proof which has been led sufficient satisfactory materials for disposing of the claim made by the Glasgow Feuing and Building Company. Perhaps these parties may be able to show the Lord Ordinary that there arc such materials, about which however little or nothing was said at the debate. The attention of parties was very naturally directed to the main question raised by the action of reduction, and the pecuniary demand of the pursuers in the petitory action received but scant notice.

“ Note with reference to Interlocutor dated 7 th July.—The Lord Ordinary does not see his way to decern for payment of any sums of money in favour of the pursuers, other than what they have themselves actually expended in making roads, and the sum decerned for is the sum proved by their secretary

“As to expenses, the Lord Ordinary has found neither party entitled to them. The case as against Watson's Trustees is one of the very hardest possible, and they were justified in obtaining at least one judgment upon the matter.”

Watson's trustees reclaimed, and argued—The ordinary doctrine by which onerous third parties obtain right to all that the record discloses as to subjects purchased by them was inapplicable here. In the first place, the Feuing Company were not onerous bona fide purchasers at all, and a consideration of the proof amply showed that they became owners of the property on the footing that they adopted the actings of the

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original promoters from a date anterior to the deed in which the mistake occurred— Magistrates of Edinburgh v. Begg, December 20, 1883, 11 R. 352. In the second place, even if they were treated as onerous third parties and independent altogether of Whyte & Binnie, the evidence showed that they were affected with sufficient knowledge of the rights of parties with reference to the roads to put them in mala fide in taking such a title as put Watson under obligation to make the roads on the 14-acre lot, and in attempting to enforce the obligation— Wardlaw v. Mackenzie, June 10, 1859, 21 D. 940 ( vide opinion of Lord President, p. 947; Waddell and Others v. Waddell and Others, March 17, 1863, 1 Macph. 635). Whyte, who was Watson's agent, acted also for the defenders, so that they must have known all about the mistake, and were dishonest in attempting to enforce it. Watson's trustees were entitled to be restored against the effect of the deed he had signed when under essential error— Stewart's Trustees v. Hart, December 2, 1875, 3 R. 192; Stodart v. Dalzell, December 16, 1876, 4 R. 236.

The Glasgow Feuing Company replied—If the case was to be regarded as one of equity they were quite willing to give it. The justice of the case however demanded restitutio in integrum. In all cases of mutual error, or error where the person who was a party to it was innocent, the option was given to him of saying whether he would consent to the contract being reformed or whether he would insist on its rescission in toto— Harris v. Pepperell, November 7, 1867, L.R., 5 Eq. 1; Bloomer v. Spittle, February 12, 1872, L.R., 13 Eq. 427; Paget v. Marshall, July 2, 1884, L.R., 28 Ch. Div. 255; Blair v. Blair, November 16, 1849, 12 D. 97. (2) The proof established that the defenders were ignorant of the error, and that Watson or his agent was negligent—in fact, but for such negligence the error would not have occurred. The rule assignatus utitur jure auetoris did not apply—the exception that the purchaser on the faith of the record is outside that rule being applicable here— M'Lellan v. Sinclair, December 7, 1830, 4 W. & S. 398; Bell's Lect., i. 168; Hawkins v. Jackson, January 30, 1850, 19 L. J. 451.; Erskine, iii. 1, 16; Hughes & Hamilton v. Gordon, 1819, 1 Bligh's App. 287. (3) Neither were the defenders affected with sufficient knowledge of the rights of parties nor was the purchase made through Whyte acting as their agent. The company was not formed for two years after the original purchase. The case was different fom Stewart's Trustees v. Hart and Stodart v. Dalzell, in respect here the proposal was to withdraw altogether a stipulation in the contract. None of the authorities cited on the other side were applicable to the circumstances which had here occurred.

At advising—